Some summary thoughts. The Chinese, through their London brokers, call their strategy indexing. The Chinese are laddering of a series of gold & silver contracts at spot scaled in various prices and at various points in time. They are all paper contracts to secure physical metal. In London, contracts are customized, not the standard shelf items like the futures contracts. In London the Chinese found some willing brokers to execute their massive array of scaled trades, in which they took on the role of counter-party on the long side for spot gold and short side for the USDollar. Ditto for spot silver. The London market has the added convenience of having some hours in overlap with China during office workdays, unlike New York. The global markets operate like a daisy chain of open hours with handoffs and wakeup calls. In London, a more fair market is manifested in the execution stage, more of a handshake. No upfront payments are made until metal is on the loading dock ramp.

There is nothing unique to operating in a market environment that is not native USDollar. The Chinese buyers could have used the IMM (Intl Monetary Market) in Chicago, a division of the CME, to put in place matching currency positions to short the USDollar against their gold contracts. But doing so would open up the Chinese to the US Homeland Security and their Gestapo questioning about large amounts of money, about terrorist motives, and even completion of money laundering forms. Perhaps the USGovt threatened to declare $billions in long gold contracts an act of terrorism. The delivery process is cumbersome in New York. One must contend with delivery windows, notice days, proof of payment, contract approval, and more. Worse, the buyer must put money upfront and then wait, sometimes for a month. It is check kiting in basic flagrant form. Therefore, the counter-party risk for the buyer is acute, since the opposite side of the contract being exercised might go bust, go into limbo with legal prosecution, or vanish entirely, during a considerable timespan. That is why very little global gold purchase takes place in New York. Thanks to my friend and colleague Rob Kirby for some explanations here. Kirby has a suspicion that Eric King does not understand many elements of the Chinese grand play because of the index descriptions and short US$ contracts.

◄$$$ THE LONDON DEEP THROAT EXPLAINED A MAJOR THREAT TO JPMORGAN FROM THE USTREASURY SELLOFF AT THE LONG MATURITY (10-YEAR & 30-YEAR). IT THREATENS THE VERY EXISTENCE OF JPMORGAN, SINCE THEY RELY UPON THE USTREASURY CARRY TRADE TO ENFORCE A FIRM 0% SHORT-TERM RATE WITH HEAVY LEVERAGE. IT IS BLOWING UP. SO JPMORGUE MUST DO HARM TO GOLD & SILVER, OR ELSE IT BECOMES A USGOVT BOND ROUT!! $$$

The same London Deep Throat made comments about the actual gold price movement, the strength of support, and short-term price potential. The timing of the comments was around December 8th and 9th, after gold had been knocked down from $1425 to $1375, when the gold price was seeking support. More nasty naked shorts were thrown at gold by the usual Big Four USBank suspects. Notice the comments about the USTreasury carry trade played by JPMorgan for typically work-free no-sweat massive profits. The scheme usually is like taking candy from a baby, the primary mechanism for keeping interest rates low in the midst of gargantuan yawning USGovt deficits. But the USTreasury bull has left town. The easy money carry trade scheme, urgently levered to keep the 0% stable environment, is blowing up in their faces. The London source said, "A bunch of the weak hands are now on the short side of the gold market. We are very close to a floor because of the massive Asian buying. People have to remember these Asian buyers are now controlling the gold and silver markets, not the little guy. It is all about the bond auctions. The USTreasury Bond fell off a cliff. In the derivatives market you have JPMorgan playing the bond market at the behest of the Fed, going long 30-years versus selling short-term paper. They buy 30-year paper and then immediately hedge themselves by selling the 30, 60 and 90-day paper. It is how they keep interest rates down. The only reason interest rates are not in double digits in the US is because of this game. These guys are short front month paper. If this bond market actually fell much longer, JPMorgan could be wiped out. I mean they would be liquidated. The Fed cannot allow them to do that. We are witnessing history here." He refers to long-term USTreasurys falling in value, rising in yield, doing harm to JPMorgue.

The inter-relationship between the USTreasury Bonds and Gold is laid out in loose terms. They are mortal enemies, a paper nemesis at odds with a metal nemesis. The JPMorgue technicians have a new mission to dole out sufficient harm to gold in order to make it less robust than the USTreasury flagship that just took on heavy water in the lower decks. The USTBonds have hit monetary inflation icebergs. JPM must harm gold during its strongest winter season. Last month it was explained the dichotomy between the physical silver and paper silver market. The ambush on the paper side offers up discounts to the metal buyers. Notice the comment to follow about how JPMorgue cannot afford to knock the silver price down too much, or else it will spark a gigantic rush of demand for the discounted silver metal. The London source continued.

"Money is flowing out of USGovt bonds, then going into precious metals. So what they are doing is trying to paint the tape and make it look like a double top in gold, with silver also retreating. Open interest went up into the decline, [making the decline] a gift. Asian buyers are laughing. The US is like a cartoon to them. They cannot believe how orchestrated this is. I think [for silver] to go through $27 is virtually impossible. It would be suicide. I do not think it will even get there. They are getting very cheeky even taking it below $28. They are not going to push it below $27 because they would just lose too much physical. The Fed is freaking out because the bond market is collapsing and they want to indicate that everything is fine, and certainly that precious metals is not your alternative. Meanwhile, the Asians will continue to buy any dip and keep adding to their position. For what it is worth, Jim Rickards is correct, the Asians are doing their buying through secret agents. As far as the gold market is concerned, gold will be $150 higher from here within five weeks." Exciting times!! The USTreasury Bond plunge has ripped the carry trade apart and enhanced the comparative value and attractiveness of Gold & Silver. If not for its infinite credit line and free money line with the USGovt, the JPMorgan enterprise would turn into a true JPMorgue of ruin, toxic paper gone bad, and go belly up, complete with pink slips for workers carrying boxes out the door in plain view.

◄$$$ THE MAX KEISER CAMPAIGN TO PURCHASE SILVER COINS AT RETAIL, SO AS TO DESTROY JPMORGAN, IS GAINING MOMENTUM. BID BULLION HAS JOINED FORCES WITH HIS PERSONAL VENDETTA. OVER 170 THOUSAND OUNCES OF SILVER BULLION IS UP FOR BID, THUS REMOVING IT FROM THE ALREADY STRAINED PHYSICAL MARKET. A POPULAR MOVEMENT IS GAINING GROUND. $$$

Bid Bullion has released 171,500 ounces of Silver Max Keiser bullion coins, in the ongoing campaign to destroy JPMorgan. The movement is gaining momentum. Using a physical crunch as the public designer weapon, Max Keiser, the indefatigable outspoken critic of every Wall Street financial fraud, has embarked with Bid Bullion to launch a limited edition silver bullion named Silver Keiser. The total amount of new silver to be created will be 171,250 ounces. Bid Bullion has created 25,000 units in 1/10 oz, 1/4 oz, 1/2 oz, 1 ounce, and 5 ounce rounds. Each coin has an image of Max Keiser engraved with the quotes "Global Insurrection Against Corporate Occupation" and also "Crash Banksters, Buy Silver" on their obverse sides. They will contain dates and ".999 Fine Silver" for an official look. The rebel Max Keiser has no direct formal relationship with Bid Bullion, nor will he benefit in any way from the sale of the bullion coins that bear his name. He has confirmed that Bid Bullion has been granted free usage of his name and handsome debonair image. Given that numerous silver retailers are out of inventory, this unique campaign will likely sell out very quickly, and add strain to the tight silver market. See the Zero Hedge article (CLICK HERE).

◄$$$ BIX WEIR POINTS OUT HOW THE SILVER COMMERCIAL SHORT POSITION HAS GROWN 15-FOLD SINCE EARLY 2002. THE BIG USBANKS HAVE GREATLY INCREASED THEIR SHORT POSITION ON THE COMEX OVER THE LAST 9 YEARS, SUPPRESSING THE SILVER PRICE FROM RISING MULTIPLES HIGHER. THE TOTAL GOLD DERIVATIVE CONTRACTS ARE ONLY 3X TO 4X BIGGER THAN SILVER, JUSTIFYING AN ARGUMENT FOR A SIMILAR PRICE RATIO. WITHOUT THE SUPPRESSION, THE SILVER PRICE MIGHT BE WELL PAST $100/OZ. $$$

In January 2002, the toal Silver Commercial Short Position was 15,677 contracts, equal to 78.4 million ounces. The silver price at the time was $4.71 per oz. The Jackass had finished buying a bunch of silver coins from 1997 to 1999 at rock bottom prices, a tiny hoard with a Morgan silver dollar backbone, a personal response to a silly low $5 silver price. Fast forward to December 2010. The current Silver Commercial Short Position is 234,699 contracts, equal to 1.2 billion ounces. The silver price is within spitting distance of $30, or at least in its shadow. In nine years, the size of the Commercial Short Position has risen 15-fold, while the silver price has risen 6-fold. Imagine at what level the silver price would be without a gigantic wet blanket holding back the bonfire of the major paper currencies. Demand is rising, price is kept low, resulting in a uniformly global critical shortage. Instead of maintaining a market balance between demand for the metal versus inventory to clear it at the proper price, the Wall Street and London criminals have broken the market and left it vulnerable to defaults. The chronic metal shortages are obscured by constant propaganda. They have destroyed the price discovery system by making the paper contracts lead the price movement. They have at the same time corrupted the market for easy insider profits, using USGovt privilege, national security cover, collusion with major gold mining firms (see Barrick Gold), private funds from stolen sources, control of the press, assaults against opposing hedge funds with USDept Treasury assistance, falsified USGovt accounting, obstruction of independent audit demands, and much more.

Under the Rubin Regime, the gold cartel led by Goldman Sachs leased and sold over 98% of the Fort Knox gold bullion supply, a certainty not in debate. They might have furthermore exchanged that same gold bullion with specially forged gold plated tungsten bars for worldwide distribution, with somwhere between $100 and $500 billion in counterfeit bars scattered to the four winds. That charge has some evidence, although the Eastern Alliance is keeping the evidence close to the vest for later usage. But that is gold, not sil ver. Without the interference, corruption, theft, and counterfeit, the silver price would be clearly north of $100 per oz and probably closer to $300 per oz. My colleague Rob Kirby reasons that based upon the size of silver derivative contracts in existence relative to gold, a 3:1 or 4:1 ratio is justified, not the 45:1 to 50:1 ratio range. He concludes silver is grotesquely under-valued.